USDA South American Soybean Update

The USDA dropped both the Argentine and Brazilian soybean estimates this month. Dry weather late in the growing season resulted in yield expectations still at trend level but falling short of the above trend outlook published a month ago.

In the period from the mid 1980’s into 2019 the correlation coefficient for the USDA April Argentine production estimate and the end of harvest forecast was 95% after removing the trend component of the data. The same procedure for Brazilian soybean production yields a 93% correlation coefficient.

South American traders have been aggressively marketing soybeans since the commencement of harvest. That is normal seasonal behavior, but the trend has been acerbated this year by a strong dollar.